Deregulation: some corporate leaders cheer, others urge caution
Boston — The Reagan administration is pledged to create a more congenial business climate in the United States by slashing red tape. Indeed, in the little more than one year that the President has been in office, scores of regulations already have fallen or been relaxed with more certain to follow.
Therefore the captains of industry ought to be reacting with unrestrained enthusiasm, right?
Not necessarily, as it turns out.
Some of these leaders call for even faster action from Washington. But others urge caution, and some even see new hazards for business if the administration's proposed ''new federalism'' comes to fruition.
Earlier this month, in an address in Los Angeles, Texaco chairman and chief executive officer John McKinley scored ''the religion of regulation'' as ''the most troubling issue facing American business today'' and for ''rarely attempting to promote productivity or start new enterprises.'' But he also cautioned that ''business should not oppose all regulations per se.''
Ford Motor Company vice-president H. L. Misch maintains that some easing of the controls on American business is necessary, but ''we don't want to throw the baby out with the bath water.''
And, says Breck Arrington, manager of governmental issues for Atlantic Richfield Company, ''I think the idea that all of business views everything that the Reagan administration does as benign is simply not the situation.''
On the other hand, Standard Oil of California president J. R. Grey notes that before Mr. Reagan's inauguration, ''We could count somewhere like 1,000 people on our payroll who were there to respond to regulatory requirements. These are being diminished quite dramatically.''
These men are typical of the leaders of major US corporations surveyed by the Monitor on their reactions to the Reagan administration's deregulatory efforts.
* The time was right for a comprehensive new look at regulation, but some of the credit for reform belongs to Reagan's Democratic predecessor, Jimmy Carter.
* What ought to be changed is the ''methodology'' of regulation rather than its purpose.
* Industry could have lived with existing rules, but the administration's efforts are already having a positive effect on producer and consumer alike.
At the turn of this century there were only six regulatory agencies in the federal government. By 1970 that number had grown to 36, swelling to 56 before Reagan assumed office. Murray Weidenbaum, chairman of the Reagan Council of Economic Advisers, estimated last fall that the cost to industry of federal controls was $100 billion a year.
Reagan named Vice-President George Bush to head his Task Force on Regulatory Relief, and the panel soon began hearing from individual businesses, trade groups, and associations across the United States, all of them identifying rules and other controls they viewed as burdensome.
Atlantic Richfield alone sent the Bush commission ''two books'' of suggested modifications to federal rules. Ford offered ''30 to 35'' suggestions that, if adopted, would have saved the company an estimated $550 million in ''cost avoidance,'' Mr. Misch says. The New England Council, an association of businesses and industries, polled its members and identified more than $6 billion worth of existing or proposed federal rules having ''the greatest adverse impact'' on firms in the region annually.
By year's end, according to administration estimates, business had been spared nearly $2 billion in operating costs by the dropping or relaxing of certain federal controls.
Other regulations require congressional action if they are to be amended or dropped, a prospect that may have been enhanced with the advent of a new Republican majority in the Senate. One of the chief targets for amendment, at least in the view of some legislators as well as the oil, steel, automobile, and other industries, is the Clean Air Act, which is due for review later this year.
''Most thoughtful observers would say that we had gone about as far as we could possibly go in terms of the very heavy overlay of federal regulation and oversight and economic monitoring, and that there would have to be an attempt to rethink this,'' says Mr. Arrington of Atlantic Richfield. ''Because of the ideology of this particular administration, they probably make it with more enthusiasm than maybe a more centrist administration would have.''
Adds his counterpart at General Motors, John Johnston: ''Some of our very best people were dedicating their lives to doing test procedures and certifications and figuring out how to cope with the paper work of government regulations - just because the penalties for not doing that were so tremendous. The climate today is much, much better than it was two or three years ago. We don't have the feeling that some of the people in government have a built-in hostility toward the business community. And there's no doubt that there was some hostility in the past.''
But Mr. Johnston concedes that the spark for regulatory relief for the automobile industry came from former Carter administration Transportation Secretary Neil Goldschmidt, whose recommendations on the subject never were implemented because time ran out before they could be.
Gulf Oil Corporation chief economist Warren Davis says he thinks that the mood of the country had turned against governmental regulation and ''at least the Carter administration, ahead of Reagan, could feel that mood and was being pushed by it.''
Mr. Davis and other leaders surveyed maintain that some level of regulation is not only necessary but also desirable. Gulf, he says, has ''never agreed with the people who say these regulations are going to shut us down; there's never been any danger of that.''
''What we have to do,'' adds W. T. Slick, senior vice-president of Exxon Company USA, a division of Exxon Inc., ''is have regulations that are reasonable , that reduce risks to an acceptable kind of level. If the approach is right, then we endorse that approach, recognizing that in the process we may get our toes tromped on once or twice.''
Cautions Mr. Misch of Ford: Industry must not risk ''a backlash or setting in of gross indignation because the whole social regulatory process has been interrupted.''
And, says Arrington, Atlantic Richfield does not want ''to jeopardize the value systems that these regulations represent. So we are trying to be very careful about the changes that are offered in any of those areas - to perhaps accord more flexibility to the business community to meet federally imposed standards, but to come to the methodology ourselves and to try to get the regulations away from the kind of ladder-width specificity (that they have had in the past).''
Arrington and others in the oil industry say that one of the earliest and most significant changes under Reagan, oil-price decontrol (another move initiated by the Carter administration), already is having beneficial effects on consumers.
''I think I can point to more general good for the country, which is really the important thing, than I could necessarily for this company,'' Arrington says.
Davis, the Gulf Oil economist, says: ''We have not found it to be any immediate bonanza for our stockholders. But I think the deregulation of oil has been one of the best deals the consumer has gotten in a long time.''
Others point to the impact this measure has had on their businesses. Says Mr. Slick of Exxon: ''It cut down a great deal on the paper work - just the process of trying to comply with the controls, all the bookkeeping and reports that had to be put together. One of the guys did a survey within our company as to what that aspect of it amounted to. He was able to identify the equivalent of 70 people that we no longer need just to keep the books.''
Mr. Grey of Standard Oil of California adds, ''(It) has uncomplicated our business - greatly.''
Johnston, the director of governmental relations for General Motors, is one of those who wishes that the administration and Congress would move even more quickly on regulatory reform. But he sees no ''quick shortcuts'' in the process.
''I guess that's only fair,'' he says, ''because the laws that protect you going ought to protect you coming, too.''
In general, these leaders agree that doing business is more enjoyable now than before the Reagan administration assumed office.
But Arrington of Atlantic Richfield injects a note of caution. Reagan's proposed new federalism, he says, ''directly implies a massive shift of activity , of the need to raise revenue, of regulatory thrust to the states and localities. And that means a Tower of Babel of confusing voices out there. So I think that business is going to be facing a welter of confusing thrusts from government - of timing, of much less clear processes of how they enact legislation and regulations, of a myriad of jurisdictions, and a myriad of approaches to subject matter. If there was one thing that business could rely upon in previous years, it was that there was at least a thrust from one central government in most of these areas.''